ADAP Advocacy Urges HRSA to Abandon Flawed 340B Rebate Pilot, Citing Proven Success of Existing Model

ADAP Advocacy has submitted written comments to the Health Resources and Services Administration urging modification of the proposed 340B rebate pilot project, describing it as deeply flawed and potentially contrary to the Administrative Procedure Act. The organization endorsed removing administrative obstacles to implementing a rebate model for all covered entities under the 340B Drug Pricing Program, particularly hospitals.

The comments, submitted in response to HHS Docket No. HRSA–2025–14619 published in the Federal Register, argued that no pilot program is necessary given the proven success of AIDS Drug Assistance Programs (ADAPs) operating under a rebate model for 27 years. Brandon M. Macsata, CEO of ADAP Advocacy, stated that ADAPs have essentially served as the pilot project for this rebate model, with their accounting of 340B rebates considered the gold standard among covered entities.

ADAP Advocacy's position highlights a significant disparity in how different entities utilize the 340B program. While ADAPs and smaller covered entities assist the uninsured and underinsured—reflecting the program's original intent—340B hospitals receive 87% of the program's benefits yet provide minimal charity care. Data from 2002, the last available year, shows 340B hospitals devoted just 2.15% of their spending to charity care. ADAP Advocacy's 340B map reveals a disturbing pattern of hospitals expanding their 340B programs while charity care commitments erode and executive compensation increases dramatically.

The rebate model's effectiveness is demonstrated through ADAPs' remarkable growth in services. In 1997, before implementing rebates, 340B ADAP drug rebates provided just 5% of funding for HIV/AIDS patients. By 2022, rebates efficiently funded 47% of programs—an increase exceeding 800%—including direct financial assistance to patients and funding for non-drug HIV/AIDS support services. Projections for 2025 estimate rebates will fund 55% of these programs.

ADAP Advocacy emphasizes that larger, better-resourced 340B hospitals are better positioned to operate effectively under a rebate model than the pharmacies participating in ADAPs. Unlike ADAPs, which rely on annual, means-based federal funding awards significantly smaller than most hospital systems' revenue, hospitals have the infrastructure and resources to implement the rebate system successfully. The organization argues that HRSA's continued delays with the pilot program prevent the 340B program from returning to its legislative intent of serving patients effectively.